Before we get too far into this, let's point out that this rumor is coming from an Israeli newspaper, so it is easy enough for a company to disavow stories like these. With that disclaimer out of the way: Amazon may be looking into buying Texas Instrument's OMAP business. As we already know, TI has expressed interest in getting out of the mobile game. Not to say they'll stop making processors, but that the focus would be less on tablets and phones, and more on embedded SoCs for a variety of applications (such as automotive, vision, and robotics).

Of course, Amazon uses TI's mobile processors for its Kindle Fire line, which runs a very heavily modified version of Android. While Texas Instruments has pledged to support its current customers, the long-term success of the e-reader line could face serious problems if Amazon is forced to ditch OMAP processors in favor of another chipset manufacturer. As a much more vertically-integrated solution than other Android devices, the web giant has likely spent a considerable amount of time and effort into optimizing Fire OS (as it is occasionally called) for the CPU.

The real question, here, is if Amazon would want to become a mobile processor manufacturer. Right now, most Kindle Fires are being sold at cost or for a loss, in the hopes of making up that revenue in content sales. It's also unclear if making the chips themselves would be cheaper or not. Right now, TI has a host of customers for its processors and, if Amazon wants to keep that business afloat, it might have to maintain those relationships. Which means, among other things becoming responsible for research, development, and sales of SoCs to OEMs. A business that, at least to TI's management, is not worth it in the long run. Whether the online retailer would want to take that risk just to avoid developing on a new platform is anyone's guess, but it sure seems risky. This would make the company a direct competitor to Qualcomm, Samsung, and NVIDIA, all of whom are major players in the components business with far more collective resources (in the form of both capital and factories) and experience in this area than Amazon.

As of right now, though, this is purely a rumor. Neither company has commented on the alleged purchase deal, and it might never go through. If it does, though, it would be a signal that Amazon is ready to step out of its content and retail niches and become a truly major player in the tech world at large. For better or worse.

Comments

Google should be doing this. It's part of what gives iOS and the iPhone a very compelling platform.

I really think Google is just pushing out a decent phone that users will use because they don't feel the need to go the extra 10-15%.

Freak4Dell

Might be a good purchase if they get to take the entire division...meaning manufacturing, sales contracts, etc. Amazon would save on the processors they use themselves, since they don't have to pay TI's markup anymore, and they would make money on the processors they sell.

http://codytoombs.wordpress.com/ Cody Toombs

That markup isn't just about profit that TI makes, it's also there to afford the costs of R&D, marketing, etc... It's the same reason that families don't buy whole theme parks to save on the cost of entrance (forgive the grossly excessive comparison). No single customer (including Amazon) is purchasing enough of the SoC's to counter the costs associated with R&D, which is why several customers are necessary.

The only way I see this being likely is if Amazon were going to open up their business to producing several new product lines that they create on their own. That's not hard to believe when considering they started with Kindles, moved beyond that with the Kindle Fire, and there have been rumors spinning around for nearly 2 years about a smartphone. To add a little more momentum to that theory, some of the software they added to the Fire HD would be very well suited for a set-top box; a product which is just plain obvious given the business model they are pursuing.

From talking with a few people I know from Amazon, there have been a couple of comments that gave me the feeling that they are thinking of attacking Apple's business head-on. It's common knowledge that they've been scooping up the right cast and crew to do more product development; although that was previously attributed to the Fire HD, it's more people than makes sense for that small of a product line. Absolutely nothing exists to confirm any of this, but I wouldn't write the rumor off as an idle consideration for Amazon, especially not that it's just about avoiding the minimal costs associated with developing some software for marginally different hardware components.